Cheque Truncation System

Cheque truncation in the Indian ScenarioDuring the last two decades or so the attitude and lifestyle of the consumers of banking service have been influenced by the advancement in technology. In tune with technological changes the banksâ€™ delivery system has to undergo tremendous transformation. The financial reforms process has enabled many competitors to enter the financial services market with a higher degree of efficiency and customer friendly behaviour. The public sector banks although reacted promptly to the new challenges, have not kept pace with the new entrants in the arena because of their inherent limitations. Under the impact of technology, the banks have been trying to innovate newer products and services to become more competitive in the ever demanding customer driven market. The technology has made it possible for the banks to come to terms with the demands of customers. The system of cheque truncation is prevalent in several foreign countries. Denmark and Belgium are the pioneers in the truncation system. They adopted complete cheque truncation system more than two decades ago. Sweden is the typical example for having achieved complete truncation where all the cheques can be presented and encashed at any branch; irrespective of the bank on which they are drawn. The process of cheque truncation is not only quick but also meets the requirements of future electronic transactions. In India the collection and payment of cheques is governed by the provisions of the Negotiable Instruments Act, 1881 which requires that the instruments must be in writing and have to be physically presented for payment in due course (before the amendment in the Negotiable Instruments Act). In view of this requirement the time taken for the processing of cheques, etc. was long particularly for the outstation cheques. In a country like India, the time taken for collection of outstation...

...“instant” world we live in. So how could banking stay unaffected? After anytime money and Internet banking, we now have instant cheque clearance.
Image based cheque clearing system or ChequeTruncationSystem (CTS) is a project undertaken by Central banks of many countries such as India (Reserve Bank of India – RBI), UAE (Central bank), Saudi Arabia (Saudi Arabia Monitoring Agency – SAMA) etc. for faster clearing of cheques.
CTS promises to bring multiple benefits to customers by substantially reducing the time taken to clear the cheques as well as to the banks by enabling them to offer better customer services and increasing operational efficiency by cutting down on overheads in physical clearing. In addition, CTS also offers better reconciliation and fraud prevention. CTS uses cheque image, instead of the physical cheque itself, for clearing of the cheque.
Image-based clearing systems have great potential in India as implementing them can result in huge cost savings for banks. The expenses incurred in archiving, storing, and transporting documents can be drastically reduced. It has been estimated that the cost savings for a mid-sized public sector bank to be in the range of Rs 20-25 crores per year. The benefits of electronic cheque presentment will be seen both in...

...Bangladesh Bank
Head Office, Dhaka
Payment Systems Division
PSD Circular No. 02/2009 Managing Director/Chief Executive Officers All scheduled banks in Bangladesh Date : 4 Falgun 1415 February 16, 2009
Dear Sir, Bangladesh Automated Cheque Processing System (BACPS) at the expanded Dhaka Clearing Region.
You are aware that Bangladesh Bank has been working to modernize the country’s payment system. The most visible step towards modernizing payment system is the establishment of the Bangladesh Automated Clearing House (BACH). Bangladesh Automated Cheque Processing System (BACPS) is one of two components of BACH. The other component of BACH is the Bangladesh Electronic Funds Transfer Network (BEFTN), which will be implemented immediately after implementing first phase of BACPS. Selected vendor has already started procuring necessary hardware and software for the BACPS solution. Detailed system specifications and operational configurations are being defined and calculated with a target of going live operation at expanded Dhaka Clearing Region with more than 1050 bank branches of 49 banks in and around the capital city during the second half of 2009. 2. The basic features of BACPS are the adoption of new cheque design standard with a Magnetic Ink Character Recognition (MICR) code line and the exchange of cheque-image and data instead...

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PART III |
CHEQUES ON A BANKER |
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Cheque defined. | 73. A cheque is a bill of exchange drawn on a banker payable on demand. Except as otherwise provided in this Part, the provisions of this Ordinance applicable to a bill of exchange payable on demand apply to a cheque. |
Presentment of cheque for payment. | 74. Subject to the provisions of this Ordinance- | (1) Where a cheque is not presented for payment within a reasonable time of its issue, and the drawer or the person on whose account it a drawn had the right at the time of such presentment as between him and the banker to have the cheque paid and suffers actual damage through the delay, he is discharged to the extent of such damage, that is to say, to the extent to which such drawer or person is a creditor of such banker to a larger amount than he would have been had such cheque been paid. |
| (2) In determining what is a reasonable time regard shall be had to the nature of the instrument, the usage of trade and of bankers, and the facts of the particular case. |
| (3) The holder of such cheque as to which such drawer or person is discharged shall be a creditor, in lieu of such drawer or person, of such banker to the extent of such discharge, and entitled to recover the amount from him. |
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Revocation of banker's...

...analyses the provision of cheque services by Bank of China (Hong Kong) and evaluates the need for providing such a service. Most, if not all, banks provide this service. Nevertheless the report’s aim is to overlook this tradition and give an insight into whether a bank should really be providing this service. The Bank Wide Operation Department is in charge of the bank’s cheque clearing process. A staff member from this department was interviewed regarding the cheque services. The report reviews the current system setup to deal with cheques and forecasts what the future holds for a cheque service providing bank.
Investigation of the current system reveal problems that are encountered in processing cheques such as time delay and administrative complications which bring up the question of continuing the provision of cheque services. Further findings include The Payments Council’s plans to abolish cheques by the year 2018. Nevertheless, the cheque is still favourable to certain groups of consumers who do not have personal bank accounts.
Several recommendations are made to overcome the issues faced when providing the cheque services. There is some truth in the belief that cheques will be used for at least another decade and corporations’ long term decisions usually do not cover very long time...

...Question 1
Define cheque and identify the characteristic of cheque.
CHEQUE
Definition of cheque is under section 73, a cheque is a bill of exchange drawn on a banker and payable on demand.
The characteristics of cheque is it is an unconditional order in writing. “ Writing ” has been in section 3 of the Interpretation Act,1967 to include all modes of representing or reproducing in visible form. Hence, a cheque may be printed and even be written in pencil as well as ink although it is not advisable tp write in pencil for fear of fraudulent alteration.
The second characteristic of cheque is it is signed by the drawer. The cheque must be signed by the drawer or his authorized agent. Signature by means of a rubber stamp is acceptable. However, it must be a fixed with the intention of it being the drawer’s signature.
The third characteristic is it is drawn on a banker ( drawee ).
The forth characteristic is it orders the banker to pay a sum certain in money on demand. The amount of the instrument must be certain. According to section 9(1) a sum is considered certain although it is required to be paid with the interest, by stated instalment, by the instalment with a provision that upon default in payment of any instalment the whole shall become due, and according to an indicated rate of...

...'Dishonour of cheque and it's legal implications. In the present scenario where day to day transactions amongst individuals, besides big business handshakes, are based on this very important negotiable instrument known as cheque. But on the other hand the misuse of the same has shaked the confidence of people and thus, the credibility of the same had come under question. At this very relevant time the Law framed for the purpose has helped people to know their legal rights and redress their grievances besides warning the offender and punishing them accordingly. Thus, the present subject matter is for all and society at large.
This article on “Dishonour of Cheque – Section 138 of the Negotiable instruments Act” gives a comprehensive overview about all aspects of cheque bouncing and Cheque Dishonour as per laws in India
Page Contents [hide]
WHAT IS A CHEQUE?
E-CHEQUE
SECTION 138 NEGOTIABLE INSTRUMENTS ACT 1881
INGREDIENTS OF OFFENCE UNDER SECTION 138
GROUNDS FOR DISHONOUR OF CHEQUE
OTHER NOTABLE ASPECTS OF OFFENCE UNDER 138 N.I. Act
COMPLAINTS AGAINST A COMPANY:
COMPLAINT AGAINST PARTNERS
DEBT OR LIABILITY
COMPLAINT UNDER 138 CAN BE FILED BY PLEADER / POWER OF ATTORNEY HOLDER
DEATH OF ORIGINAL COMPLAINANT
DEATH OF ACCUSED
SUCCESSIVE PRESENTATION OF CHEQUES
SETTLEMENT DURING TRIAL
EXAMINATION OF COMPLAINANT ON OATH
POST DATED...

...OF CHEQUES
A cheque is one form of a bill of exchange. However, all bills of exchange are not cheques. A cheque is always drawn on a bank or a banker. It is payable immediately on demand, without any days of grace. The sum that is directed to be paid should be distinctly expressed in the instrument. If there is a discrepancy between the amount stated in words and that stated in figures, then the amount stated in words shall be the amount that is ordered to be paid. As per the amendments, brought in by the Negotiable Instruments (Amendment and Miscellaneous Provisions) Act, 2002, truncated cheques and electronic cheques also fall within the purview of the definition of cheques.
The Negotiable Instruments (Amendment and Miscellaneous Provisions) Act, 2002 defines truncated cheques as those cheques, which are truncated by the clearinghouse or by the bank during the course of a clearing cycle and electronic cheques as those cheques, which contain the exact mirror image of paper cheques. In order to ensure the minimum safety standards with the use of digital signatures and asymmetric crypto system, such cheques are generated, written and signed in a secure system.
When any cheque, drawn by a person for the discharge of any liability is returned by the...